Zerodha - Number One Discount Broker in India

[RAVI1952]

OMG :annoyed:
:annoyed::annoyed:
Well now i can understand how come margin is different in terminal and file.
lol:
They need a id to tell that why margin is different as if there is different margin for different clients logging in.If the terminal is same then common things should be same and this person was saying that he cannot tell me the reason without my id .
Ravi bhai thanks for opening my eyes in time.:thumb:

You have to be extremely careful while dealing with these brokers.

 

[RAVI1952]

No wonder thousands of both small and big traders lost millions of dollars in USA when one if its biggest brokerages called MF Global went bankrupt.

In India, the margin rules and Exchanges are very strict. For example, in Options spreads we have to maintain a much higher margin than most countries in the world. I have never heard of a big brokerage going bankrupt in India in recent times.

I like your reference to MF Global. Do you know,Why MF Global went bankrupt". Please go through the entire case. In India, no broker goes bankrupt. Do you know Why? Because no action is taken against them.

 

[RAVI1952]

Ha ha ha he is quoting USA...Did all the banks are failed in USA because of good money management? If ZERODHA failed what will happen to their client. Don't give example of USA. I am happy that Zerodha has good money management. If you not happy with zerodha go to any other broker who can help you to suicide in the market.

Thank you for your advice. I am certainly quitting Zerodha and wish you all the best.

 

[RAVI1952]

Good that Zerodha is following strict risk control practices. Just look at how excessive greed of one trader caused a Billion dollar loss for JP Morgan..

Hope you know Who this trader was? He was an employee of JP Morgan and not someone like you or me having account with the broker.

 

[TradeRaid]

Hope you know Who this trader was? He was an employee of JP Morgan and not someone like you or me having account with the broker.

Oh, you are that " I know all " Guy.. ..

For a guy from the US and who knows it all, you do spend a lot of time on this forum among mere mortals like us..

btw, u made my evening very interesting with all these posts to read...

 

[RAVI1952]

We are good with you using the option writing premium, what is the issue is to use the loophole that exists in the system.

Assuming you write a 5000 call at 800 using MIS. YOu will receive 40,000 as premium but only around 20,000 is blocked. You will use this 40000 to write more options. This way you can run an unlimited position with just 20,000 in your account.. Usually when such things are done, we know that the trader is looking at taking a ride by putting the broker at risk. Most of us at Zerodha are traders and we can spot these very easily..

Let me ask you a straight question:
(1) If you are policy is "Not to allow premium on writing options" to be available for future trading, Why don't you include it in your policy on Margin? It is not included. The possible reason is NSE does not restrict.
(2) When you show funds available with margin in ledger in the back office,you do not reduce the available margin from the premium amount on writing options.
(3) When someone takes more position, the money available as premium from writing options is allowed automatically as it is included in the available margin. All my trades are based on margin availability as per backoffice.
(4) When you decide to square off the positions, you suddenly decide to take away these funds from available margin,and thus raise a RED Flag.
(5) Please let me know,if 1 to 4 is correct.
(6) If say "No", I shall raise many more queries.
(7) If you say"Yes", then tell me how are you justified in squaring the positions as you have changed the very basis of available/required margin.

Please be specific and do not try to mislead the forum by raising hypothetical situations.
Ravinder

 

[RAVI1952]

Oh, you are that " I know all " Guy.. ..

For a guy from the US and who knows it all, you do spend a lot of time on this forum among mere mortals like us..

btw, u made my evening very interesting with all these posts to read...

Sometimes, I enjoy reading what people like you write.

 

[Zerodha]

hello,
Have not received the margin report today as well.???? the figures shown in the margin report accessed through your backoffice bears updation/change. kindly have a look. regards.

The margin reports are the last set of reports sent and hence the delay..You should receive it in a while...You can refer to the margin statement that you receive for any queries you have..Should you still have any further queries you can write to [email protected].

 

[m_d757]

I have just read the details of that "Option Margin case". I think the most important factor is , whether the client has sufficient funds in account if the worst case scenario happens.
If he has the funds then it is his party. Else the broker has to protect himself ( & his other clients ) by closing the positions. The actual document of risk management policy is secondary.
The risk management itself is the most important issue.

 

[RAVI1952]

I have just read the details of that "Option Margin case". I think the most important factor is , whether the client has sufficient funds in account if the worst case scenario happens.
If he has the funds then it is his party. Else the broker has to protect himself ( & his other clients ) by closing the positions. The actual document of risk management policy is secondary.
The risk management itself is the most important issue.

Hi m_d757,

You are right. But what do you mean by worst case scenario? Do you mean prices going up or down by 100% or 1000% ? I believe that there are set mechanisms to work out margin requirement--SPAN MARGIN,EXPOSURE MARGIN.Most brokers ask much higher margin than the one laid down by NSE for their safety/to use clients funds at no interest. If market suddenly change, there could be problems and at times the need to liquidate the position. This problem is further aggravated by unscrupulous brokers by changing the basis of margin requirement. This is what exactly is the problem with Zerodha
What Zerodha is doing that in normal case,the margin requirement is calculated as per NSE calculation basis with some addition to cover for safety. The funds received by option writer as premium is allowed as available funds for taking additional positions. However, when market turns volatile, they will withdraw availability of funds received by option writer as premium. This is not included in their policy for margin requirement.
When the market is going against the client, there is some additional requirement of funds to cover the market movement. It is easy for client to understand the requirement and make good either from the funds available in clients ledger and/or by transferring additional funds from his/her bank account or liquidating the positions. Complete details are available in clients Margin requirement . At this stage Zerodha goes one step forward. They disallow the funds available to client as option writing premium. This detail is not available in clients margin position. Till the previous day,these funds were allowed to be used by client for taking additional position. This sudden change in the basis of calculation of margin money requirement is the cause of whole problem. Why such practice is being adopted by Zerodha , only Zerodha can reply. I consider it totally unacceptable and cheating
Thank you,
ravinder